Last December the Government signed up to what has become known as the Northern Irish backstop. This demands that in the event of no deal being agreed between the EU and the UK, Northern Ireland would stay in the Customs Union. I was against the Government agreeing this at the time as I believed it would dominate any plans for a new post-Brexit trading relationship, attacking as it does the nature of the Union of the United Kingdom. Yet since then, even though this has not been ratified, the Government refuses to tell the EU that the backstop must be scrapped because it is unnecessary. Many puzzled at this, have begun to wonder if the Government has also made commitments to the auto industry that the UK would, in some form or another, be tied into the Customs Union, to protect their supply chains. To back this up, from time to time dire warnings are issued from the industry about Brexit. The strongest recent warning has come from Ralf Speth, CEO of Jaguar Land Rover (JLR), who has suggested that no deal would be followed by factories closing, “tens of thousands” of job losses and at a cost to JLR of £60billion a year – all based on the belief that Brexit would render his company unable to “build cars on time and on budget in the UK”. This comes as JLR announce the closure of their Solihull factory for a fortnight this month, which was quickly blamed on Brexit. However, as industry commentators have pointed out, auto companies should not blame Brexit for their troubles. Falling demand in China has seen sales of Land Rovers nearly halve, but this is also a question of their own strategy at home. For JLR, it is true that UK sales have fallen: but so too have sales on the continent, which presumably are not also caused by Brexit. Part of the reason for this is that JLR has followed its big German competitors in focusing on diesel. This, ironically, was incentivised by the EU regulation under which some in the industry were happy to remain – which in fact shows exactly why we need to be out of the EU regulatory system as soon as possible. Despite all these prophecies of doom emanating from some in the car industry, we need to put this industry in perspective. Employment levels across the UK are at the highest they have been for decades with over 75% of the working age population in work today. Auto manufacturing has also been a great success, rejuvenated by the arrival of the Japanese under Lady Thatcher and it is now competing successfully with the rest of the world. However, despite that success, employment in the industry constitutes some 0.57% of total UK employment. Also, in interview after interview, the issue of the just-in-time supply chain has been raised, with politicians and suppliers issuing dire warnings that as their supply chain is so harmonised with EU suppliers, leaving the Customs Union would be a disaster, leaving them unable to get supplies from the EU ‘just in time,’ leading to job losses. Yet a recent Boston Consulting report hows that some 64% of the Auto Industries suppliers are from the UK or the rest of the world, outstripping the 36% from the EU. So right now their supply chain relies on many items from around the world and, strangely, despite the customs procedures, they manage to get to the factory, ‘just in time.’ Furthermore, despite much of the rhetoric of the industry, whilst important, it is not the dominant part of the UK economy around which our trading relationship is to be set. Figures show the gross value added to our economy of motor vehicle manufacturing, according to the House of Commons Library Briefing Paper, Motor industry: statistics and policy, is 0.8%. I am amongst many who believe, contrary to those warnings, with 90% of global growth coming from outside the EU, that Brexit offers improved access to markets around the world which will boost those figures. The Government needs to listen, but it needs to listen more widely to those who believe the UK will thrive and prosper; to successful producers such as Aston Martin’s CFO Mark Wilson who recently stated that Brexit “doesn’t materially impact our plans,” to Lord Bamford of JCB and to other sectors which are substantial manufacturing firms and prestige marques of British industry, “systems integrators” which are linchpins of local economies. This is because they know there are plenty of simple ways to maintain low-friction borders without being trapped in the Customs Union as a rule taker. Such arrangements allow very low-friction trade in goods, preserving the ‘just-in-time’ supply chains we hear so much about. Brexit is unusual, however, precisely because it means beginning with the absence of customs clearance costs, a very low-friction starting point. So the UK-EU relationship can move towards what is increasingly normality anyway: separating the movement of goods from the processing of forms. Far from an unusually difficult situation, this means an especially good opportunity for ambitious customs arrangements. So, if only the British Government would stop obsessing about the Customs Union and recognise there are other ways to both avoid hard borders now and get rid of the Northern Irish backstop. As made clear in the recent European Research Group paper – endorsed by two ex-Northern Ireland Secretaries, David Trimble, architect of the Northern Ireland peace accord, David Davis and European customs operators and experts – low-friction borders can continue because all the technologies and administrative systems for the Irish border already exist. First, the UK can provide text for a best in class customs and trade facilitation chapter of a Free Trade Agreement. A range of tech solutions for customs can then include, for example: inter-agency information sharing; simplified procedures and data-processing at points of departure and destination; mutual recognition by the UK and EU of trusted trader schemes like authorised economic operator (AEO) programmes; importer self-assessment for duties; and the physical inspection of goods by random checks. This has been backed by many experts on the continent, like Sweden’s former head of customs, Lars Karlsson. According to the World Bank, among developed countries, 97% of firms’ goods pass through customs with no checks at all. It is in this very freedom from the EU regulatory machine that is the great prize of Brexit. However, if we treat Brexit as a damage limitation exercise, we will miss it. Some major corporates have tolerated this regulatory burden because it swamps their smaller competitors. But real Brexit, in which we take back control of our regulations and fully leave the Customs Union and Single Market, will be to the benefit – not the detriment – of the UK car industry. Research by Economists for Free Trade has shown that, even with the value of sterling rising once more, profitability is set to increase, with UK manufacturers able to re-route component supply chains away from the EU. Furthermore, our capacity to remove trade barriers like the 10% tariff on imported cars will also bring down prices for our consumers, and provide the industry with more competition, in this sector as for many others. It is time for the Government to be bold and throw off this search for some kind of Customs Union membership that pleases the EU but twists the UK in knots and fails to deliver on the referendum and the manifesto on which the Prime Minister was elected. The EU says it wants a trade deal, so let’s call their bluff. Get them to sit down and show them that there is no need for hard borders in Ireland or anywhere else. Once we have done this, a full trade deal which benefits both the EU and the UK can be on the table and agreed relatively quickly – otherwise there will be no trade deal. No more negotiating on bended knee, tell them, if they want their £39billion. Then bin the backstop.